Sales to Equity Definition and Explanation

Our Financial Analysis Success Kit is Ready!

Click to take a closer look at the Financial Analysis Success Kit Click the button to learn more about the Financial Analysis Success Kit Click the button to learn more about the financial analysis success it

Why you should take a look at the Financial Analysis Success Kit:

We've combined all our highly popular financial analysis tools into one mega-financial-analysis-kit that will save you hundreds of dollars if purchased separately. The kit contains 9 files packed with the most important financial ratio analysis tools you can find to help rocket your way to mastering financial analysis. The kit includes:

  1. The eBook "Learn Ratio Analysis In Minutes"

  2. The Learn Financial Ratio Analysis Excel Spreadsheet (2 versions!)

  3. A BONUS...Our eBook of "Key Financial Statement Terms"

  4. Another HUGE BONUS...Five-Part Financial Ratio Cheat Sheet Series

The result? You get all these professionally created tools for a great low price.

Learn more on our product page:

Take a Look

Quick Definition

Measures how well a company uses equity from its stockholders to generate sales.

[sc:kit02 ]

Sales to Equity Formula

Explanation of Sales to Equity

The Sales to Equity ratio measures how much equity has been retained within the company to produce a level of Net Sales. If measured over time, this ratio can help reveal how well the equity is being used to generate sales.

Importance of Sales to Equity

An increasing amount of equity is generally a positive sign, showing the company is more able to make use of its Total Stockholders Equity to generate sales. Some caution should be used, as companies can intentionally reduce the amount of equity in the company by buying back company stock or distributing dividends.

This can make this ratio appear more favorable and the company appear more efficient, but may instead starve themselves of essential equity to help build future sales.